GLOBLE MOTORS LIMITED Vs. MEHTA TEJA SINGH

JUDGEMENT

(1.) THIS is an appeal filed against the order of the learned single Judge by which he allowed the application under Section SO of the Arbitration Act filed by the respondents.

(2.) THE respondent's case was that an agreement had been entered into with the appellant company which is now under liquidation by means of an agreement dated 1-6-1967011 the terms mentioned therein. In the said agreement it was also stated that any dispute or difference arising in regard to any of the terms contained in the agreement, shall be settled in accordance with the provisions of the Arbitration Act. THE application under Section 20 of the Arbitration Act was filed in November, 197.3.

(3.) GOWER in Company Law 3rd Edition page, 526 has noticed that because of the trustee like position of the directors a contract between the company with another firm of partnership of which one of the directors was a partner liave been avoided at the instance of the company notwithstanding that its terms were perfectly fair and that in the words of Lord Granworth L.C. "so strictly is this principle adhered to th;it no question is allowed to be raised as to the fairness or unfairness of a contract so entered into......". Thus the contract Will be voidable at the instance of a company and any profits made by the Directors personally will be recoverable by the company (page 527 supra).